Social Security, Medicare Drop in Public Interest
for State of the Union but Top Issues for Actuaries
American Academy of Actuaries offer their help in
strengthening lifetime income solutions
Jan. 28, 2014 – A strong plea for President Barack
Obama to address the financial security of Social Security and Medicare
in his State of the Union address tonight has been voiced not by senior
citizens or their advocates but by the American Academy of Actuaries
(AAA). Voters, however, seem to have lost some interest in the security
of these federal programs and are more interested in strengthening the
economy, creating more jobs, protecting us from terrorism and improving
the educational system, according to Pew Research.
Pew survey conducted this month shows Social Security dropping to
fifth place and Medicare down at number seven, both down 4 percentage
points from last year.
The AAA wants action on the “long-delayed and
often-ignored issues of financial security of federal programs like
Medicare and Social Security.” And, they added, “The options for solving
their fiscal condition become only more limited and difficult as time
Editor’s Note: Another gigantic battle seems
eminent as Republicans are expected to continue
their efforts to cut the entitlement programs of Social Security,
Medicare and Medicaid. This is a look at the strategy of Paul Ryan, GOP
House Budget Chairman; 10th Anniversary for Center for American Progress
- see video
“The president is seeking to make 2014 a ‘year of
action,’ and there are few matters in Washington more often missing from
everyone’s to-do list than federal entitlement reforms. The American
Academy of Actuaries is the U.S. actuarial profession’s voice for
serving the public and we are highlighting a fundamental choice: Take
action to address solvency and sustainability issues now, or delay
action and face a dwindling number of available policy options later —
options that may have a more severe impact on beneficiaries and
taxpayers,” says Tom Terry, president of the Academy.
“While the scope of, and possible solutions to, the
financial challenges vary according to program, a basic fact remains
that challenges will grow more unmanageable the longer they remain
AAA Offers a Starting Point
The Academy’s news release said “committed
volunteer actuaries” have already performed considerable analysis of key
federal programs, which policymakers can use as a starting-point in
their work, including:
>> Evaluations by pension actuaries that support
an increase in the full retirement age for Social Security, which should
be part of any reform effort in order to promote sustainable solvency.
Advantages to raising the full retirement age include: compensating for
longer lifespans/increased longevity; preserving the current benefit
formula; increasing labor force participation; and preserving disability
>> Analyses by health actuaries of meaningful
reforms to ensure that the Medicare program can continue to provide
health security to current and future beneficiaries. Delaying tough
decisions will lead to the need for more drastic changes in the future,
with potentially greater negative consequences for beneficiaries,
taxpayers, and health care providers.
>> Significant examinations by health actuaries
of options to contain health care costs to support a more sustainable
health care system, which can benefit Medicare, Medicaid,and CHIP
(Children’s Health Insurance Program), as well as the cost of federal
employee health insurance coverage. Even if the recent slowdown in
health spending growth continues, the level of spending remains high and
there is evidence that the nation is not getting enough value for its
health dollars spent. Policymakers need to build on the efforts of
health reform to shift the health care payment and delivery systems to
focus on cost-effective and high quality care.
The AAA also once a focus on the retirement
security. Often absent during periods where job growth and economic
recovery are the focus, retirement-income needs should not be left out
of the public-policy discourse, the Academy reminds policymakers.
“In particular, policymakers should consider:
encouraging the use of lifetime-income solutions for people living
longer in retirement; improving the governance, and disclosures of the
measurements and value of, public sector (state/municipal) employee
pension plans; solutions to provide for affordable long-term care
financing; and emphasizing retirement plans’ alignment, governance,
efficiency, and sustainability to engender enduring retirement systems,”
the organizations news release said..
The Academy recently launched an initiative, Retirement
for the AGES, focused on U.S. retirement-income systems,
which need to be strengthened to improve financial security for retired
Americans. The new Academy monograph provides
an innovative framework for evaluating retirement plans and systems,
both private and public, and retirement income public policy proposals.
Learn more about public policy options to address
public program solvency and sustainability, and other issues, can be
found by clicking on the “Public Policy” tab at www.actuary.org.
The American Academy of Actuaries is a
17,500-member professional association whose mission is to serve the
public and the U.S. actuarial profession. The Academy assists public
policymakers on all levels by providing leadership, objective expertise,
and actuarial advice on risk and financial security issues. The Academy
also sets qualification, practice, and professionalism standards for
actuaries in the United States.
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